With the current economic situation as it is, it’s difficult enough for someone who has a perfectly clean credit history to be accepted for a personal loan at the moment, but for an individual who may have a bad credit score due to loan arrears, or a County Court Judgement for example, it is even harder to obtain funding through a personal loan at anything close to reasonable rates of interest.

A recent report has now revealed that several loan companies which charge particularly high rates of interest for personal loans are actively target marketing those individuals with a bad credit rating, as these people are usually unlikely to be accepted by a mainstream lender, due to their financial past.

Many people who may be looking for a bad credit loan may be able to find a much cheaper loan by applying to one of the more reputable sub prime lenders and although there are now much fewer of these companies and they would certainly be paying a higher rate than someone with a clean track record, it is likely that they could still save more money than if they opted for a company who offers loans without any credit checks.

Many of these high interest charging companies are targeting more vulnerable, younger customers who may have a poor credit history, often through social networking websites, offering extra cash quickly and easily without any of the hassles of credit checks.

This target marketing is causing concerns for loan industry professionals, who believe many people are not getting the best possible deal available for themselves, apart from the fact that many of these borrowers will be applying for a high interest loan without realising the full implications of what they are taking on.

A spokesman for the credit reference agency Equifax said “We are starting to see a vicious downward spiral. Now legitimate sub prime lenders have been driven out of the market, borrowers are being forced to use less responsible sub prime lenders.”

Don’t worry, I’m not about to go all Dickensian on you all just before Christmas, it’s just that with everybody looking back over what happened in the housing and homeowner loan markets throughout the course of 2008, it might be a pleasant change (or maybe not!) to consider where we are heading over the course of next year, for those individuals looking to either move home, or take their first step onto the housing ladder and apply for their first homeowner loan.

First of all, let’s get the gloom out of the way. The Royal Institute of Chartered Surveyors (RICS) has just published its latest predictions for the housing market and, not surprisingly is expecting average property prices to continue to decline throughout 2009, with a predicted drop of around 10 per cent over the course of the year, giving an overall decrease in property values of approximately 25 per cent from their peak in 2007.

RICS claims that the worsening economic outlook for the UK is largely to blame for the price drops, coupled with the continuing lack of available funding and tightening lending criteria from banks and building societies on homeowner loans and other secured loans.

On a more positive note (it is Christmas after all!), RICS claim that we have probably reached the bottom of the slump in house buying activity and low house prices, coupled with low interest rates on secured loans is likely to start encouraging potential buyers, many of whom have been waiting for the past year, to re enter the market.

The recent Government interventions into the homeowner loan and mortgage markets is also hopefully going to start filtering through the system, making it slightly easier for buyers to obtain a new secured loan. Confidence is starting to slowly return to the housing and homeowner loan markets and could be just the catalyst we require to turn things around.

Finally, on behalf of everybody at Cheap Loans, I would like to take this opportunity to wish all our readers a very merry Christmas and a happy New Year and thank you for using Cheap loans throughout the year.

Are you one of those many people living in the UK today who always make a New Years resolution, only to break it within the first couple of weeks, or are you one of the extreme few who actually do what they say they are going to do?

Personally, I solved the problem for myself many years ago, by resolving to stop making New Years resolutions and so far the plan seems to have worked! But a recent survey has shown that somewhere in the region of twenty million of us in the UK are planning to make a resolution…..this time it will be good, this time it will be different…and nobody will have to get nailed to anything!

Given the current economic situation in the UK, not surprisingly, the number one resolution for people this year is to try and sort out their financial situation. The main priority is to reduce the cost of personal loans and credit card payments whilst others intend to try and pay off loans and other debts altogether, with almost half of those interviewed saying that reducing personal loan debt was their main goal, yet only 15 per cent said they intended to save money.

Half the people surveyed said that they wanted to lose weight or get fitter, 28 per cent said they intended to stop smoking, but only 15 per cent said they wanted to spend more time with their families (you may draw your own conclusions from that!).

Please excuse me if I come across as being all cynical, nothing could be further from the truth! But in reality more than half of all New Years resolutions made, fail within the first three months of the year.

If you genuinely want to reduce your personal loan and credit card commitments, set a realistic target and plan properly to achieve your goal. Work out your disposable income with a budget planner, do not spend money unnecessarily and shop around for the best deals on personal loans and credit cards, you may be surprised at just how much you can save.

Finally, may I wish you all the best of luck with your resolutions and a happy and (dare I say it) prosperous New Year!

Anybody who has applied for a personal loan recently (and if you’re reading this, then it is likely that you have done, or are thinking about it) is likely to be aware of just how difficult it is to obtain a cheap loan at the moment.

But a new survey from Moneyexpert.com has revealed just how hard the personal loan industry has been hit by the effects of the credit crunch.

According to the survey, the total number of personal loans which are available on the high street, or through a broker, has dropped by almost half since the beginning of the year.

For a borrower who is looking for a loan of £5,000, there was a choice of 105 different loan deals at the start of this year, but now this figure has dropped to 57, severely restricting a potential borrower’s options.

At the same time as this, the typical Annual Percentage Rates (APR’s) for personal loans have increased by almost three times the rate which was applicable in January. They typical APR on a £5,000 loan now stands at 29.40 per cent, compared with 10.65 per cent at the start of the year.

The main reason given for this increase in personal loan rates is due to an increase in higher risk borrowers and bad credit loan applications and despite the Bank of England reducing interest rates significantly, this does not seem to be having any effect on the personal unsecured loan market.

Sean Gardner of Moneyexpert.com said “December is normally a time to give, not it seems if you’re a loan provider however. With unemployment on the up, lenders are increasingly thinking twice before offering money they’re much less sure they’ll get back. The cost of this risk is being passed on to us all with higher APR’s and fewer products available.”

All those borrowers who have opted for a fixed rate of interest on their homeowner loan or secured loan over the course of the past twelve months or so, are likely to be kicking themselves at the moment, as they are forced to sit back and watch interest rates continue to fall, leaving them paying well above the odds for their own loan, whilst those with a tracker rate on their loan are enjoying the benefits of significant rate cuts.

However, fixed rate loans account for around 69 per cent of all homeowner loans in the UK, an increase of 18 per cent on the same time last year.

But it seems that banks and building societies are cashing in on borrowers opting for a fixed rate loan in the rates they are currently charging their customers.

Although the cost of borrowing on the wholesale money markets has reduced by 2.61 per cent since the beginning of October this year, the average two year fixed rate secured loan has only dropped by 0.71 per cent, which means that lenders are not passing on the savings they are receiving to their customers with these loan products.

Borrowers who opt for a fixed rate loan usually expect that the rate they pay will be slightly higher than a tracker rate, but with things as they are at the moment, there is a difference of 1.16 per cent between the average two year fixed and tracker loan rates, whereas this difference was only 0.14 per cent twelve months ago.

Michelle Slade of MoneyFacts.co.uk said “By not reintroducing cheaper tracker mortgages to the market, the lenders are leaving borrowers with little option but to go on to more expensive fixed rate mortgages.

It is evident that lenders are continuing to increase their margins, despite a fall in the cost of funding. It would appear that all lenders are adopting a similar approach, despite calls from the government to pass on cuts to borrowers.”